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SunTec's stand at this year's Sibos event |
In 2012, Commerzbank's Financial Institutions division implemented SunTec’s pricing and billing solution from the transaction business management system –finance suite.
The platform is used to provide integrated billing services for each of the bank's clients, drawing together customer data which was previously held in multiple locations. As the information was held across different platforms, it made it hard for the bank to have a comprehensive overview of their clients' needs.
Reinhard Furthmayr, SVP and head - financial institutions, products and marketing, Commerzbank, says the bank had experienced issues in easily obtaining clear client pricing information.
“Earlier [before SunTec’s implementation] pricing information would not be held together in one position, and to find out the specific details on each individual client it would require pulling the information from various locations," he says. "The process was cumbersome and time consuming.”
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Nanda Kumar, |
The move to using the external software came after an assessment of the bank’s capabilities against existing products. Furthmayr says: “The software previously used was part of our own payment engine. The decision to use the SunTec platform was made after an RFP checking and comparing external offers with the cost and time needed for revamping the in-house solution. Price, flexibility and time to completion were the driving factors behind the decision.”
Implementing the platform gave the bank a better overview of the pricing they were offering clients and could tailor their offering according to client history and relationship.
Gordon Gray, global head, financial service industry practice at SunTec, says the platform was developed by the vendor in response to the issues banks had built up over time through the operation of different platforms and legacy systems, adding: “Banks have historically implemented a new platform to deal with each issue.”
He explains that in looking for a solution, banks often overhaul entire platforms, but the solution could be making more efficient use of what is already implemented.
“They would try to solve problems by looking at the front or back office, but often the issue is in the middle layer,” says Gray.
Consolidating information enables the user banks to understand the needs of each client without having to undergo lengthy research processes, using systems developed for other purposes. What's more, pulling together data gives the bank a greater overview of the profitability of their clients, helping them to understand which are their core customer base and provide the greatest returns.
“Banks often don’t have fundamental insight into their profits controls,” says Gray. "If they wanted to find the profitability of a customer, they needed to go into the accountancy systems. But this is a system designed for taxes and does not have an easily accessible system to obtain the required information.
“If you can’t see an overview of a situation, then you can’t control it.”
Reluctance from the bank side to update systems can stem from the lack of quick return on the investment.
Commerzbank's Furthmayr explains that while updating their platforms did not generate new income, it did bring about savings, adding: “An extreme advantage of initiating the project was that through the savings made we were able to pay for the project within a year.”
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Gordon Gray, SunTec |
Gray at SunTec adds: “Installing more efficient platforms does more than just update the systems. It can reduce cost by up to 6% and even bring a return in the first year of use, very quickly paying for itself. It is more than just something nice to do for a bank.” Furthmayr says there are advantages to working with the companies that some consider as being a threat to the bank’s traditional business.
“Banks today are seeing more challenges from fintechs and disruptors getting into their value chain," he says. "Using the new platform enables the bank to act faster.
“When the legacy system was in place, it took a long time to decide on the appropriate new product and then build out the capability. But now the systems are more efficient, we can work better with the customers and create quick solutions to their requirements. We can adapt more readily to the needs of the customers.”
The idea that fintechs are a new challenge and opportunity for the traditional banking industry is not something that Nanda Kumar, president and CEO of SunTec, agrees with.
“The development of fintech is not as opportunistic as some parts of the industry make out – SunTec has been in existence for 25 years,” says Kumar.
Instead, he sees the real issues as coming from the expectations of clients based on what they have experienced with other institutions, whether bank or tech vendor.
Kumar says: “Banks are facing more immediate challenges from developments such as real-time processing and how they can control payments, which needs to be processed in time frames as short as milliseconds.”
Nirmal Chander, regional sales head at SunTec, argues that the implementation of further tech can benefit the corporate client, adding: “The introduction of new technology changes the potential value of the industry. It has created the ability to bundle together services which can create a greater flow in prices.”
The difficulty of working with disjointed legacy platforms in the rapidly changing environment will undermine the competitive advantage of banks.
Gray says: “The biggest challenges from the real-time environment is that customers are expecting it as an essential and the providers needs to be up to offering it as standard.”
The requirement is pressing across the industry as a whole.
“For real-time to work, the bank needs to ensure the feasibility both of their systems and on the other side, which could require both parties upgrading systems,” says SunTec's Chander.